The German logistics market has stabilised, aligning with developer expectations and suggesting that lower multipliers for top-tier assets are unlikely in the future, Kilian Mahler, managing director of DLE Logistics told PropertyEU at Expo Real.
‘A decline in interest rates has spurred interest in value-add assets, particularly attracting American investors seeking such opportunities in Germany,’ he said. ‘This increased demand for value-add assets contrasts with a relatively lower demand for core assets, as core investors are generally more risk-averse and have alternative investment options.’
Mahler pointed out that, as the cycle progresses, investors are becoming more willing to take risks, leading to an influx of private equity and American capital. This increased investor activity is expected to contribute to a more favourable market environment, supported by low interest rates and inflation.
The current market outlook is positive, he said, offering investors opportunities for higher returns. This contrasts with the situation in 2020-2021, when investors were questioning the potential for returns beyond 3%. Today, the market presents a more favourable landscape for value-add investments.
DLE Logistics recently closed a core-plus deal in Germany, and is currently conducting due diligence on another property. ‘While the market remains sluggish, attracting insurance companies and pension funds as investors is essential for our success. These institutions are still somewhat cautious,’ Mahler noted.
He suggested the logistics and light industrial sectors currently present attractive investment opportunities, with low vacancy rates compared to office and retail. ‘Unlike residential properties, our rental contracts are typically indexed, and vacancy rates are low.’
Once one of Europe's most expensive real estate markets, Germany now offers more favourable pricing compared to France and the Netherlands, said Mahler. With its robust economy and infrastructure, the country remains an attractive investment destination, he added.
Citing the example of Bad Hersfeld, he said that DLE Logistics is prioritising the acquisition of existing assets and developing new buildings on existing plots. ‘Our goal is to maximise returns by creating additional space.’
